10.    Long-Term Debt

Long-term debt consisted of:

 

(in $ millions)		Interest rate				Maturity (1)		December 31, 2013				December 31, 2012
Secured debt
Senior Secured Credit Agreement
Revolver borrowings
Dollar denominated (2)			L+4 1/4%			June 2018			—				20
Term loans
Dollar denominated (2)			L+5%			June 2019			1,525				—
Dollar denominated (refinanced in June 2013)			L+4 3/4%						—				1,064
Euro denominated (refinanced in June 2013)			L+4 3/4%						—				284
“Tranche S” (refinanced in June 2013)			L+4 3/4%						—				137
2012 Secured Credit Agreement
Dollar denominated term loan (3)			L+9 1/2%						—				171
Second Lien Credit Agreement
Tranche 1 dollar denominated term loan (3)			L+8%			January 2016			644				—
Tranche 2 dollar denominated term loan (4)			8 3/8%			December 2016			234				—
Second Priority Secured Notes
Dollar denominated floating rate notes (refinanced in April 2013) (5)			L+6%						—				225
Unsecured debt
Senior Notes
Dollar denominated floating rate notes (refinanced in April 2013)			L+4 5/8%						—				122
Euro denominated floating rate notes (refinanced in April 2013)			L+4 5/8%						—				201
Dollar denominated notes (refinanced in April 2013)			9 7/8%						—				429
Dollar denominated notes (refinanced in April 2013)			9%						—				250
Dollar denominated notes (6)			13 7/8%			March 2016			411				—
Dollar denominated floating rate notes (7)			L+8 5/8%			March 2016			188				—
Senior Subordinated Notes
Dollar denominated notes			11 7/8%			September 2016			25				—
Dollar denominated notes			11 7/8%			September 2016			247				247
Euro denominated notes			10 7/8%			September 2016			192				184
Capital leases									107				96
Total debt									3,573				3,430
Less: current portion									45				38
Long-term debt									3,528				3,392

 

(1)

The term loans maturing in June 2019 and the revolver availability through June 2018 are subject to a reduction in maturity to November 2015, December 2015, June 2016 or September 2016 if the Company is unable to repay or refinance its debt outstanding under the Second Lien Credit Agreement or its unsecured debt prior to their maturity dates.

 

(2)	Minimum LIBOR floor of 1.25%

 

(3)	Minimum LIBOR floor of 1.5%

 

(4)	Cash interest of 4% and payment-in-kind interest of 4.375%

 

(5)	Payable in cash or payment-in-kind

 

(6)	Cash interest of 11.375% and payment-in-kind interest of 2.5%

 

(7)	Cash interest of LIBOR+6.125% plus payment-in-kind interest of 2.5%

 

The Company’s Senior Notes are unsecured senior obligations of the Company and are subordinated to all existing and future secured indebtedness of the Company but will be senior in right of payment to any existing and future subordinated indebtedness. The Company’s Senior Subordinated Notes are unsecured subordinated obligations of the Company and are subordinated in right of payment to all existing and future senior indebtedness and secured indebtedness of the Company.

2013

In April 2013, the Company completed an exchange offer for substantially all of its existing senior notes due in September 2014 and March 2016, including the dollar denominated floating rates notes due 2014, euro denominated floating rate notes due 2014, 9.875% dollar denominated notes due 2014 and 9% dollar denominated notes due 2016, for approximately $406 million of new 13.875% senior fixed rate notes due March 2016, bearing cash interest of 11.375% and 2.5% of interest payable as payment-in-kind interest, and approximately $185 million of new senior floating rate notes due March 2016 (together with the new senior fixed rate notes, the “Senior Notes”), bearing cash interest of LIBOR plus 6.125% and 2.5% of interest payable as payment-in-kind interest (the “Senior Notes Exchange Offers”). In connection with the Senior Notes Exchange Offers, the holders of the new Senior Notes provided a waiver and release of all claims asserted related to the Company’s refinancing in 2011. To facilitate the transactions:

 

•

The Company entered into a new second lien secured credit agreement (“Second Lien Credit Agreement”) and issued $630 million of Tranche 1 second priority secured loans, at a discount of 1%, due January 2016 (the “Tranche 1 Loans”). The cash proceeds were used to (i) repay $175 million of indebtedness outstanding under the credit agreement dated as of May 8, 2012 (the “2012 Secured Credit Agreement”), (ii) repay in cash $393 million as part of the Senior Notes Exchange Offers, and (iii) pay consent fees in connection with the Senior Notes Exchange Offers and consent solicitations. The Tranche 1 Loans bear cash interest of LIBOR plus 8%, with a minimum LIBOR floor of 1.5%. During May 2013, the Company further borrowed $15 million under the Second Lien Credit Agreement to redeem the outstanding senior notes held by holders who did not participate in the Senior Notes Exchange Offers. Tranche 1 Loans are subject to a 2% repayment fee, which is accreted as interest expense over the term of the loans. During the year ended December 31, 2013, $3 million was accreted into the outstanding loan amount and $2 million of debt discount was amortized.

 

•

The Company completed an exchange offer for its existing Second Priority Secured Notes due December 2016 for an equal principal amount of new term loans under the Second Lien Credit Agreement due December 2016 (the “Tranche 2 Loans”). The Tranche 2 Loans bear interest of 8.375% (cash interest of 4% and payment-in-kind interest of 4.375%).

 

•

The Company paid a consent fee to holders of the Company’s Senior Subordinated Notes in exchange for a waiver and release of all claims asserted in connection with the Company’s refinancing in 2011 and amended certain restrictive covenants under the indentures for the Senior Subordinated Notes.

 

•

The Company’s direct parent holding company, Travelport Holdings Limited (“Travelport Holdings”), acquired all of its outstanding Extended Tranche A Loans in exchange for (i) approximately 43.3% of the equity of Travelport Worldwide Limited (“Worldwide”), ultimate parent company indirectly owning 100% of the Company, and (ii) $25 million of newly issued 11.875% Senior Subordinated Notes of the Company due September 2016, and acquired all of its outstanding Extended Tranche B Loans in exchange for approximately 34.6% of the equity of Worldwide.

 

In June 2013, the Company amended and restated its senior secured credit agreement (the “Sixth Amended and Restated Credit Agreement”) which, among other things, (i) refinanced in full the outstanding term loans, revolver borrowings and other commitments with the proceeds of a new $1,554 million term loan facility issued at a discount of 1.5% with a maturity date of June 2019 and an initial interest rate equal to LIBOR plus 5% (with a minimum LIBOR floor of 1.25%); (ii) provides for a new $120 million super priority revolving credit facility with a maturity date of June 2018 and an initial interest rate equal to LIBOR plus 4.25% (with a minimum LIBOR floor of 1.25%); (iii) provides for incremental term loan facilities subject to a 3.1 to 1.0 first lien leverage ratio test; (iv) amended the definition of Consolidated EBITDA to add back amortization of customer loyalty payments; and (v) amended certain financial covenants, including the total leverage ratio, the senior secured leverage ratio, the minimum liquidity ratio and limitations on indebtedness, investments and restricted payments. The Company is required to repay the term loans in quarterly installments equal to 1% per annum of the original funded principal amount of $1,554 million (adjusted for any subsequent prepayments), commencing September 2013. During the year ended December 31, 2013, the Company repaid $8 million as its quarterly repayment, and $3 million of debt discount was amortized.

In June 2013, the Company amended its Second Lien Credit Agreement to amend the definitions of (i) Consolidated EBITDA; (ii) total leverage ratio and senior secured leverage ratio; and (iii) certain other definitions to conform to the amendments in Sixth Amended and Restated Credit Agreement.

As a result of the above comprehensive refinancings during the year ended December 31, 2013, the Company recognized a loss on extinguishment of debt of $49 million, which comprised of $39 million of written-off of unamortized debt finance costs, $5 million of unamortized debt discount written-off and $5 million of early repayment penalty.

Pursuant to the Sixth Amended and Restated Secured Credit Agreement, the Company’s total revolving credit facility is $120 million all of which remains undrawn as of December 31, 2013. The commitment fee on the revolving loans decreased from 300 basis points as at December 31, 2012 to 100 basis points as at December 31, 2013.

During the year ended December 31, 2013, the Company borrowed $73 million and repaid $93 million under its revolving credit facility.

As a result of the Company’s Sixth Amended and Restated Credit Agreement, the $13 million of synthetic letter of credit facility was terminated. The Company’s $133 million of letter of credit facility, which was collateralized by $137 million of restricted cash funded from Tranche S loans, was also terminated and replaced with a new $137 million cash collateralized letter of credit facility, maturing in June 2018. The terms under the new letters of credit facility provide that 103% of cash collateral has to be maintained for outstanding letters of credit. As of December 31, 2013, $77 million of letters of credit were outstanding under the terms of the new facility, against which the Company had provided $79 million as cash collateral, and the Company had $60 million of remaining capacity under its letters of credit facility.

Pursuant to its separation agreement with Orbitz Worldwide, the Company was committed to provide up to $75 million of letters of credit on behalf of Orbitz Worldwide. However, subsequent to April 15, 2013, the date on which the Company completed its comprehensive refinancing, the Company and Orbitz Worldwide ceased to be controlled by affiliates of The Blackstone Group (“Blackstone”), and the Company is no longer obligated to maintain or issue new letters of credit on behalf of Orbitz Worldwide. As of December 31, 2013, there were no letters of credit issued by the Company on behalf of Orbitz Worldwide, and all of the previously issued letters of credit were cancelled.

During the year ended December 31, 2013, $16 million of payment-in-kind interest was capitalized into the Second Priority Secured Notes and Senior Notes. In addition, $6 million of payment-in-kind interest was accrued for the Senior Notes and Tranche 2 Loans and included within other non-current liabilities on the Company’s consolidated balance sheets.

 

Foreign exchange fluctuations resulted in a $9 million increase in the principal amount of euro denominated loans during the year ended December 31, 2013.

Subsequent to the balance sheet date, $135 million of Senior Subordinated Notes were exchanged for common shares of Travelport Worldwide Limited (See Note 20 – Subsequent Events).

2012

On December 11, 2012, the Company amended and restated its then existing senior secured credit agreement pursuant to the Fifth Amended and Restated Credit Agreement which, among other things, (i) added additional guarantees and collateral from subsidiaries previously excluded from the collateral and guarantee requirements under the senior secured credit agreement, (ii) amended intercompany transaction restrictions and (iii) increased the interest rate payable to lenders by 25 basis points. In addition, at a future date and upon an additional increase of 50 basis points in the interest rate payable to lenders under the senior secured credit agreement, the Fifth Amendment and Restated Agreement (i) permitted the Company to issue additional junior secured debt; (ii) amended the change of control definition to permit holders of the Company’s Senior Notes, Senior Subordinated Notes and Second Priority Secured Notes, and holders of term loans issued by the Company’s direct parent holding company, Travelport Holdings Limited to acquire voting stock of Travelport Limited or any of its direct or indirect parents without triggering an event of default under the First Lien Credit Agreement and (iii) amended certain existing covenants. The amendments to the covenants included, but were not limited to: (a) a decrease in the minimum liquidity covenant to $45 million starting on September 30, 2013, (b) a delay in step-downs in the total leverage ratio covenant by four quarters commencing with the quarter ending September 30, 2013, (c) an increase in the general basket for investments to $35 million, and (d) permitted the Company to refinance the Second Priority Secured Notes which carried payment-in-kind interest with new junior secured indebtedness that paid cash interest.

The Company accounted for the amendment and restatement as a modification of debt.

As a result of the Fifth Amended and Restated Credit Agreement, (i) the interest rates on the Company’s euro and dollar denominated term loans due August 2015 increased from EURIBOR plus 4.5% and USLIBOR plus 4.5%, respectively to EURIBOR plus 4.75% and US LIBOR plus 4.75% respectively, (ii) the interest rates on the dollar denominated “Tranche S” term loans increased from USLIBOR plus 4.5% to USLIBOR plus 4.75%.

On May 8, 2012, the Company entered into a credit agreement (the “2012 Secured Credit Agreement”) which (i) allowed for $175 million of new term loans issued at a discount of 3%, secured on a junior priority basis to the term loans under the senior secured credit agreement and on a senior priority basis to the Second Priority Secured Notes; (ii) carried interest at USLIBOR plus 9.5% with a minimum USLIBOR floor of 1.5%, payable quarterly; and (iii) added a senior secured leverage ratio test, initially set at 4.95 until December 31, 2012.

Proceeds from the term loans under 2012 Secured Credit Agreement were used to repay in full $41 million of euro denominated terms loans due August 2013, $121 million of dollar denominated term loans due August 2013 and $3 million of dollar denominated term loans due August 2015.

Foreign exchange fluctuations resulted in a $6 million increase in the principal amount of secured euro denominated long-term loans during the year ended December 31, 2012.

During the year ended December 31, 2012, $14 million of interest was capitalized into the Second Priority Secured Notes.

 

During the year ended December 31, 2012, the Company borrowed $80 million and repaid $95 million under the revolving credit facility. At December 31, 2012, the Company had outstanding borrowings to external lenders of $20 million under the revolving credit facility, with remaining external borrowing capacity of $98 million.

The interest rate on the revolving loans increased from LIBOR plus 4.5% to LIBOR plus 4.75% pursuant to Fifth Amended and Restated Credit Agreement.

The Company’s dollar denominated floating rate Senior Notes bore interest at a rate equal to USLIBOR plus 4 ⁵/₈%. The Company’s euro denominated floating rate Senior Notes bore interest at a rate equal to EURIBOR plus 4 ⁵/₈%.

During the year ended December 31, 2012, the Company repurchased $14 million of 9 ⁷/₈% dollar denominated Senior Notes, $11 million of euro denominated floating rate Senior Notes and $1 million of dollar denominated floating rate Senior Notes for $20 million of cash, resulting in a gain of $6 million.

Foreign exchange fluctuations resulted in a $5 million increase in the principal amount of unsecured euro denominated long-term debt during the year ended December 31, 2012.

Capital Leases

During 2013, the Company repaid $20 million under its capital lease obligations, terminated $1 million of capital leases and entered into $32 million of new capital leases for information technology assets. During 2012, the Company repaid $16 million under its capital lease obligations, terminated $14 million of capital leases and entered into $63 million of new capital leases for information technology assets.

Debt Maturities

Aggregate maturities of debt as of December 31, 2013 are as follows:

 

(in $ millions)		Year Ending December 31, (2)
2014			45
2015			43
2016			1,978
2017			33
2018			18
Thereafter (1)			1,456
			3,573

 

(1)

The term loans maturing in June 2019 and the revolver availability through June 2018 are subject to a reduction in maturity to November 2015, December 2015, June 2016 or September 2016 if the Company is unable to repay or refinance its outstanding debt under the Second Lien Credit Agreement or its unsecured debt prior to their maturity dates.

 

(2)

The above table excludes (i) $70 million of payment-in-kind interest and $10 million of repayment fees for the Tranche 2 Loans and Senior Notes, of which $6 million of payment-in-kind interest has been accrued within other non-current liabilities as of December 31, 2013 and (ii) $26 million of debt discount on term loans under the Sixth Amendment and Restated Credit Agreement and Second Lien Credit Agreement.

 

Debt Finance Costs

Debt finance costs are capitalized within other non-current assets on the consolidated balance sheets and amortized over the term of the related debt into earnings as part of interest expense in the consolidated statements of operations. The movement in deferred financing costs is summarized below:

 

(in $ millions)		Year Ended December 31, 2013				Year Ended December 31, 2012				Year Ended December 31, 2011
Balance as of January 1			74				98				37
Capitalization of debt finance costs			29				13				84
Amortization			(24	)			(37	)			(23	)
Written-off as loss on extinguishment			(39	)			—				—
Balance as of December 31			40				74				98

During the year ended December 31, 2013, the Company incurred $21 million of debt finance costs and $5 million of early repayment penalty on term loans under the 2012 Secured Credit Agreement which were recorded directly in the Company’s consolidated statements of operations in connection with the refinancing in the second quarter of 2013.

Amortization of debt finance costs during 2012 includes $5 million of debt finance costs written off due to early repayment of term loans in May 2012. In December 2012, the Company also incurred $7 million of debt finance costs which were recorded directly in the consolidated statements of operations in connection with amendments made to the senior secured credit agreement.

In September 2011, the Company incurred $16 million of debt finance costs which were recorded directly in the consolidated statements of operations in connection with the credit agreement amendments and the second lien debt.

Debt Covenants and Guarantees

The Company’s Sixth Amendment and Restated Credit Agreement, Second Lien Credit Agreement and the Indentures contain a number of covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability to incur additional indebtedness or issue preferred stock; create liens on assets; enter into sale and leaseback transactions; engage in mergers or consolidations; sell assets; pay dividends and distributions or repurchase capital stock; make investments, loans or advances; repay subordinated indebtedness (including the Company’s Senior Subordinated Notes); make certain acquisitions; engage in certain transactions with affiliates; amend material agreements governing the Company’s subordinated indebtedness (including the Company’s Senior Subordinated Notes); change the Company’s lines of business; and change the status of the Company as a passive holding company.

In addition, under the Sixth Amendment and Restated Credit Agreement, the Company is required to operate within a maximum total leverage ratio and a senior secured leverage ratio and to maintain a minimum cash balance at the end of every fiscal quarter. The Sixth Amendment and Restated Credit Agreement, Second Lien Credit Agreement and Indentures also contain certain customary affirmative covenants and events of default. As of December 31, 2013, the Company was in compliance with all restrictive and financial covenants related to its long-term debt.